By TIOL News Service

NEW DELHI, AUGUST 05, 2014: THE question raised in the three Writ Petitions pertains to sub-section (2) of section 110 of the Customs Act, 1962 which reads -

(2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized :

Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of Customs for a period not exceeding six months.

The meaning to be ascribed to the word “given” is the issue involved.

The question, before the High Court is whether mere dispatch of a notice under Section 124(a) of the said Act would imply that the notice was "given" within the meaning of Section 124(a) and Section 110(2) of the said Act?

++ In the first case the seizure of goods took place on 29.10.2012. The Commissioner of Customs invoked the proviso and extended the period by an order-in-original dated 26.04.2013 by a further six months. So, the notice under Section 124(a) had to be given on or before 28.10.2013. The show cause notice was dated 28.10.2013. It was sent by speed post to the petitioner and the tracking record indicates that the postal item was booked on 29.10.2013 and actually received by the petitioner on 30.10.2013. It is the case of the petitioner that signing of the show cause notice on 28.10.2013 was not sufficient compliance and that the same should have been received on or before 28.10.2013. It was further submitted that the notice was itself posted on 29.10.2013 which was, in any event, beyond the terminal date of 28.10.2013.

++ In the second case, seizure of Rs.10,00,000/- (Rupees Ten Lakhs) cash took place on 12.08.2011. The show cause notice under Section 124(a) of the said Act was dated 10.02.2012 and it was also dispatched on 10.02.2012, both within six months of the date of seizure. However, the said notice under Section 124(a) of the said Act was received by the petitioner on 13.02.2012, when the period of six months from the date of seizure had expired. It is, therefore, contended that this was not sufficient compliance of the provisions of Section 110(2) read with Section 124(a) of the said Act. As the notice was received beyond the six-month period, therefore, the respondents were liable to release the sum of Rs.10,00,000/- which they had seized, unconditionally.

++ In the third case, goods including the currency were seized on 09.10.2012. The six-month period would have expired on 08.04.2013 but the Commissioner of Customs passed an order on 08.04.2013 itself extending the period by a further six months. On 19.10.2013, a letter of that very date i.e., 19.10.2013 was received by the petitioner through a Special Messenger sent by the respondent. The letter indicated that earlier a show cause notice dated 08.10.2013 had been sent by speed post but the same could not be delivered as the house was found locked. Consequently, the said notice was being sent again through a Special Messenger. It was, therefore, requested that the petitioner should acknowledge receipt of the notice. As the notice was received beyond the period of six months, the petitioner requested for unconditional release of the goods including the currency.

Relying upon the decisions in the case of K. Narsimhiah vs. H.C. Singri Gowda: AIR 1966 SC 330 & Ambalal Morarji Soni vs. Union of India and Ors: AIR 1972 GUJ 126, the petitioners submitted that by the use of the word "given" the legislative intent was clear that the notice had to be received by the person concerned or the notice had to be offered/tendered and refused by the person concerned. Mere dispatch by post would not be covered by the word "given" as appearing in the above mentioned provisions of the said Act.

The Counsel for the Revenue submitted that Section 153 of the Customs Act also needed to be considered since the said provision dealt with the manner in which any order or decision or summon or notice which is issued under the said Act is required to be served. Inasmuch as the moment a notice is tendered or sent by registered post or by an approved courier that amounts to service of the notice and the actual receipt by the noticee is not a relevant consideration. It is submitted that in each of the three cases on hand, the notices had been sent by registered post within the stipulated period (either original or extended) as prescribed under Section 110(2) of the said Act and, therefore, the goods were not liable to be released. Reliance is placed on the decision in Union of India vs. Kanti Tarafdar: 1997 (91) ELT 51 (Cal.), CCE, Indore vs. Ram Kumar Aggarwal: 2012 (280) ELT 13 (MP).  

The High Court extracted the contents of s. 110(2), s.124, s.153 of the Customs Act, 1962 and observed -

+ On a plain reading of Section 110(2) of the said Act it is evident that the goods which have been seized under Section 110(1) of the said Act cannot be retained beyond the stipulated period of six months or the extended period of a further six months, if no notice in respect of the goods is "given" under Section 124(a) of the said Act within the said period. Section 124(a) of the said Act clearly stipulates that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is "given a notice" in writing, "informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty". It is evident that no order of confiscation can be passed unless and until such notice is "given" to the concerned person.

+ The key words, are - informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty. The object of Section 124(a) is that the person concerned had to be informed of the grounds on which the confiscation of the goods is to be founded. This can only happen when the person from whom the goods have been seized, receives the notice and is capable of reading and understanding the grounds of the proposed confiscation. Therefore, upon a conjoint reading of Section 110(2) and Section 124(a) of the said Act, the notice contemplated in these provisions can only be regarded as having been "given" when it is actually received or deemed to be received by the person from whom the goods have been seized. The whole object of giving the notice under Section 124(a) of the said Act is to inform the person concerned of the grounds of the proposed confiscation or proposed imposition of penalty as also to give him an opportunity to make a representation in writing so that an order confiscating or not confiscating the goods may be passed.

+ The view expressed by the Supreme Court was followed as it should have been, by the Gujarat High Court in the case of Ambalal Morarji Soni while construing the very word "given" appearing in Sections 110(2) and 124(a) of the said Act.We are in full agreement with the decision of the Gujarat High Court in the case of Ambalal Morarji Soni and are, therefore, of the view that the notices in the present petition had not been "given" before the terminal date specified in Section 110(2) of the said Act.

The High Court also observed - "There is no doubt that the decision of the Calcutta High Court in KantiTarafdar completely supports the contention of the learned counsel for the respondents. But, with respect, we do not agree with the said decision."

Another argument was raised by the Revenue by placing reliance on Section 27 of the General Clauses Act, 1897 that the expressions "serve", "given" and "send" were used interchangeably and, therefore, the word "given" used in Section 110(2) and Section 124(a) of the said Act would also mean "served". And, since Section 153 of the said Act deals with service of notices, mere dispatch by registered post would amount to service of the notices and, therefore, would amount to giving of the notices under Section 124(a) of the said Act.

The High Court dismissed this submission by observing -

+ We do not agree with this submission made on behalf of the learned counsel for the respondents inasmuch as they have ignored the last phrase used in Section 27 of the General Clauses Act, 1897 which is to the following effect -

"…to have been effected at the time at which the letter would be delivered in the ordinary course of post."

+ In each of the cases before us, the show cause notices under Section 124(a) of the said Act bears the dates which happens to be either the last date or the penultimate date of the stipulated period under Section 110(2) of the said Act. It cannot be expected that a document sent by registered post would be delivered on the very same day or even the next day in the ordinary course of post.

+ Furthermore, Section 27 of the General Clauses Act is qualified by the words - "unless a different intention appears." That   different intention is discernible from the expression "informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty." Unless a person receives the notice how can he said to be 'informed' of the said grounds? Therefore, we do not see as to how Section 27 of the General Clauses Act, 1897, would in any way come to the aid of the respondents.

It was, therefore, held that the expression "notice is given" does not logically translate to the conclusion that "notice must be issued within the stipulated period".

Observing that none of the petitioners had received the notices under Section 124(a) of the said Act within the time stipulated in Section 110(2) thereof, the writ petitions were allowed and the respondents were directed to release the goods including the currency seized from the petitioners forthwith, unconditionally.

(See 2014-TIOL-1303-HC-DEL-CUS )